market watch | Nov 11, 2020 |
Will a COVID-19 vaccine end Wall Street’s obsession with home?

Pfizer’s big news on Monday regarding the early success of trials of its COVID-19 vaccine quickly made waves in the stock market, triggering a massive repricing of financial assets and sending shares of airlines, hotels, movie theater chains and cruise ship operators soaring. As Wall Street begins to imagine people once again getting on planes and ships and taking the family to Disney World, traders quickly snapped up shares of anything that felt like a company poised to reopen.

What they sold, as quickly as they could, was anything with a “stay at home” bent—including the online home furnishings giant Wayfair, which lost nearly $6 billion in value in one day as its shares tumbled more than 20 percent on the heels of the vaccine announcement. (Companies like work-from-home mainstay Zoom took a similar hit.)

But does the sharp selloff in Wayfair shares suggest that Wall Street’s summer romance with the home industry is coming to an end?

Traders of Home Depot and Lowe’s certainly seem to think so. Those shares have fallen by 3 and 7 percent, respectively, in the past two days. Masco, the home improvement giant that owns everything from Behr paint to Delta faucets, has seen its shares fall by nearly 8 percent in recent days.

Trading in some of the high-end home and office furnishings companies tells a different story, however. Knoll, for example, parent company of trade brands such as Holly Hunt, Vladimir Kagan and Edelman Leather, has seen its shares jump by 20 percent since the vaccine news broke. Shares of Herman Miller, parent company of Design Within Reach, also jumped by more than 10 percent. (Though office and contract sales still drive much of the revenues for these brands, I don’t believe the recent price moves are connected to a return to workplaces, but rather a shift in trading strategy that favors value over growth.)

The shares of RH were little changed on the news. Having risen 400 percent from their March lows, the company’s shares have been consolidating over the past few months. Store openings have continued during COVID, though, including the recent 60,000-square-foot gallery in Corte Madera, California, complete with rooftop restaurant—suggesting that RH is certainly positioned to be a beneficiary of the post-vaccine world.

So, which will it be: Will the country reopen and get back to spending on recreation and leisure at the home industry’s expense, or does the nesting continue even once we really do have a widely distributed vaccine? Trends tend to remain in place much longer than we anticipate, and aren’t usually altered by the news and events of a few days. There is much to suggest that with home sales still so strong—not to mention rampant relocations throughout the country—we are still in the early innings of home being the center of our world. How our priorities will shift in the coming months, however, we are about to find out.

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Dennis Scully is the host of the weekly BOH podcast, where he explores the changes and challenges facing the interior design community through interviews with industry thought leaders, entrepreneurs and creatives. Scully was previously a business development consultant for major trade brands, and has held sales and marketing roles at Domino, Waterworks and Twill Textiles. In his Market Watch columns, Scully calls upon his background as an analyst and longtime securities trader as he explores the ins and outs of the home industry’s publicly traded businesses.

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